Archives for December 2018

New Jersey and Pennsylvania Reaction to Wayfair Decision on Nexus Thresholds

December 19, 2018 by Frank

New Jersey and Pennsylvania React to Wayfair Decision on Nexus Thresholds

NJ & PA React to U.S. Supreme Court Wayfair Decision

Our July 24, 2018 blog alerted our readers to the U.S. Supreme Court’s landmark decision that physical presence is no longer required for a state taxing authority to find that a company has sufficient contact with that state to make it subject to the state’s sales tax reporting requirements. Wayfair was an out-of-state retailer that South Dakota successfully prevailed at the U.S. Supreme Court in finding that it had sufficient nexus (contact with the state) to make it subject to South Dakota’s sales and use taxes.

South Dakota’s threshold for finding nexus was that the out-of-state retailer had at least $100,000 in sales delivered to the state or the retailer had at least 200 transactions in a year in the state. We noted in our blog that the Supreme Court did not rule whether these amounts were a required threshold or simply indicative of substantial nexus. We had forewarned our readers that states may push the envelope by implementing lower thresholds than S. Dakota did. Let’s look at how two states have reacted. [Read more…] about New Jersey and Pennsylvania Reaction to Wayfair Decision on Nexus Thresholds

Utilities – PA DOR Continues Assault on Home Office Deduction

December 11, 2018 by Frank

Utilities – PA DOR Continues Assault on Home Office Deduction

PA Dept. of Revenue’s Revised Onerous Requirement

for Reporting Sales Tax on Utilities

In our March 17, 2015 posting, we discussed that taxpayers who claim a home office deduction would be required to pay sales tax to the Pennsylvania (PA) Department of Revenue (DOR). We pointed out that personal residential use of electric, gas and oil are not subject to PA sales tax. When a taxpayer uses a portion of their personal residence for business purposes (i.e., the home office), the residential usage is transformed to commercial usage. Since commercial usage is subject to PA sales tax, taxpayers claiming the home office would have a PA sales tax liability.

For pre-2018 tax years, to pay the sales tax to PA, taxpayers would simply report the sales tax on line 25 on page two of the PA-40 individual income tax return. The PA DOR recently announced that only residential use tax can be reported on that line.

Initially, the DOR announced that taxpayers claiming a home office would need to register with the DOR for a sales/use tax account to remit the tax and make separate periodic filings with the DOR using the E-Tides system. After an outcry by tax practitioners about this onerous approach, the DOR listened, but unfortunately, decided upon another onerous approach.

Under current guidelines, taxpayers will be asked [Read more…] about Utilities – PA DOR Continues Assault on Home Office Deduction

How Much Do You Charge to Prepare a Simple Tax Return?

December 4, 2018 by Frank

How Much Do You Charge to Prepare a Simple Tax Return?

Is There a Hidden Message in this Question?

Penny Wise and Dollar Foolish Thoughts

With each passing week as the April 15 due date approaches, the number of callers whose first question is “How much do you charge to prepare a simple tax return?” exponentially increases. To a seasoned tax professional, the hidden message in this question is that the caller is a price shopper and cares nothing about the experience and expertise of the person entrusted to prepare their tax return. While the cost to prepare a tax return is very important, the benefits of working with an experienced tax professional are much more important.

A former client recently called us to consult with us about a $10,000 IRS tax assessment and a $2,000 penalty that had been imposed on his self-prepared tax return. When we asked this former client why he stopped using us, he said that he thought that he would save the $400 fee and [Read more…] about How Much Do You Charge to Prepare a Simple Tax Return?